It ain’t what you know, it’s who you know

Insider trading is in the news, and is so often is the case, there are parallels to your day-to-day decisions and actions as a leader in the world of business, independent of the specific indictment. And so …

A common defense for insider traders is that it’s a victimless crime. That is, when the stock in question is from a publicly held company, it’s rarely possible to identify any individual who was directly harmed by the insider trading.

The usual counter is that the stock in question is priced wrong because the information in question is known only to insiders. Armed with that information, insider traders know when a stock is underpriced and they should buy, and when it’s overpriced and they should sell. Who do they buy from and sell to? To other investors who lack access to the key facts in question.

From KJR’s perspective this is interesting but not essential, included here for completeness. Here’s what is essential to you as a business leader.

Imagine that, instead of investing, we’re talking about the Minnesota State Lottery. Now imagine the headline story is that one player has been told the first 3 numbers of the winning entry.

If I’ve done my arithmetic right, this knowledge improves the odds of winning from 1 in 36,348,339,200 to 1 in 115,600. As payouts, based on the first number, are typically in the tens of millions and each ticket costs $2, an investment of $231,200 pretty much guarantees the player with insider knowledge a multi-million dollar profit.

Ignoring the debate over whether this is a crime with victims or not, we come to a more important matter: Everyone now knows it’s a rigged game.

This is an issue that matters to all business leaders, or at least it should: Many, without even thinking about it, rig the game of getting raises, bonuses, and promotions.

Take, for example, the very common situation of a mentor/protégé relationship. This is widely considered to be a positive thing — leaders should mentor promising employees as part of being a good corporate citizen.

And it is: the additional mentoring makes the protégé a better manager and leader; having a better manager and leader makes the company incrementally more effective; and as the protégé progresses through the management ranks, the mentor increases his or her influence in the corporation at large.

Also: Because the mentor/protégé relationship is warmer than that of boss to direct report, the mentor and protégé inevitably develop a personal friendship, the result of which is that the protégé has increasing influence with his/her mentor.

Which is also good, in that the mentor now gets a second pair of eyes on difficult decisions.

What’s not to like?

Everything is not to like if you aren’t the mentor or protégé, which, mathematically speaking, is everyone minus one. Because everyone (minus one if the protégé is oblivious) knows the game of raises, bonuses, and promotions is rigged in favor of the protégé.

Take, for example, one of the most basic leadership skills (and one of the eight tasks of leadership — see Leading IT: (Still) the Toughest Job in the World, 2nd Edition, by yours truly, IS Survivor Publishing, 2011. Leaders generally delegate to those they considered most qualified. As they mentor their protégé, the protégé is, in their eyes, more and more likely to be the most qualified, especially for high-visibility assignments.

Which gets the protégé the next high-visibility assignment.

It’s a virtuous cycle if you’re the protégé; a vicious one if you’re anyone else.

How, as a leader, do you solve this? It isn’t complicated: As a business leader you should think of yourself as mentor for all of your direct reports.

What’s easy is the concept. What’s hard is that you inevitably have better rapport with some of the men and women who report to you than you do with others.

My recommendation: Invest the time needed to develop rapport with the ones who are harder.

That’s the view as you consider your relationship with your direct reports. How about your relationship with your own manager, if your manager is less conscious of these dynamics?

The solution is as inescapable as it is unfortunate. It’s that the only thing worse than having to play a crooked game is losing one.

Comments
(6)

Thanks, Bob, for another excellent, thought-provoking column. It’s still too bad that your column gives the impression that it’s about IT, because this is column is completely for broad use (I am not an IT person, but always read your columns).

The column is particularly timely because of the very recent indictment of Rep. Chris Collins and the resulting op/ed column in the Washington Post claiming that there’s nothing wrong with insider trading. My counter reasoning was very incomplete compared to yours.

It ain’t what you know, it is who you are. This is simply an example of the survival of the fittest. Those bold enough to seek out a mentor have a better opportunity to survive and prosper in a meritocracy. While a parent will naturally nurture all of his/her children, those who respond best to nurturing will ultimately get the most attention. It is no different in the corporate world. While it is the responsibility of managers to nurture all their reports, the protégé will naturally get the most (or best quality) attention.

Whether those assertive enough to seek out mentorships are necessarily those most likely to offer the qualities sought by the employer is a different – and very important – open question.

As a skilled tradesman said to me 40 years ago, “You pick what you know.”

Without firm affirmative action in place, I just don’t see how most managers get around their conscious and unconscious racism, sexism, classism, as well as different styles of doing things, that keeps leading to the same old, same old.

It’s not just society that pays, but organization as well. Yet, if the organization doesn’t have thoughtful, but effective affirmative protocols in place to protect and reward managers even more than those who report them, it can leave most managers and management hopefuls seeing mentoring only some as the most sensible way of growing staff.

A great reminder to figure out how to connect constructively with everyone.

A manager must mentor every direct report, no matter how differently skilled and differently wired. Part of that mentoring is to ensure they do the same with their teams. We must meet them where they are, help guide them to where they need to be. Ah, but where do they need to be? Some place that represents a negotiated destination blending their aspirations and what you and the organization need from them.